While I was idly flicking through the TV channels recently, I came across an episode of the 1980s comedy The Young Ones.
Hated by parents but adored by my schoolfriends and me, the series followed the lives of four students studying at Scumbag College who shared a grotty house rented out to them by a dodgy landlord.
Although the surreal adventures of Rick, Vyvyan, Neil and Mike were wildly exaggerated for comic effect, the accommodation they lived in would have been familiar to anyone studying away from home in the 1980s and 1990s.
If you were a student in those days, I bet you still shudder at memories of cold Victorian terraces with landlords cramming as many rent-paying tenants into a property as they could get away with!
Many of those going to university today will face a different type of challenge, however: finding somewhere to live in the first place.
According to the latest research from estate agents Savills, students heading to the UK’s leading university cities will find there are a quarter fewer homes available to rent than there were before the pandemic, even though the number of full-time students has increased by nearly 12.5% over the same period1.
And it’s not just students in need of somewhere to live. The current cost of living crisis means young professionals are finding it increasingly difficult to afford to rent a place on their own or are struggling to raise the deposit needed to buy a home, meaning many are being pushed into considering house sharing.
It means there could be opportunities out there for investors willing turn their attention to properties which offer accommodation to three or more unrelated tenants who share bathroom and kitchen facilities, otherwise known as houses in multiple occupation (HMOs).
And with HMOs generating an average rental yield of 6.4%, almost a full percentage point higher than the overall average rental yield of 5.6%2, it would be no surprise if we see even greater numbers of landlords investigating the potential they offer.
Introducing the new generation of tenants
But before an investor decides to purchase an HMO, they should know that young tenants now expect a lot more when it comes to their first taste of life away from home.
Let’s take a closer look at four key things students and young professionals look for in a new rental property.
Wi-Fi as standard
In a world when connectivity is everything, the most important thing at the top of a prospective tenant’s wish list is a fast, reliable Wi-Fi service in every room in the house.
If it’s not speedy enough to be able to support a household full of people’s different online needs, a landlord could quickly find themselves losing tenants.
Comfortable living space
Young tenants aren’t prepared to put up with poky, dingy rooms with old, second-hand furniture any longer; they want bright, comfortable rooms with decent furniture and, preferably, a double bed.
Landlords don’t need to spend a fortune: provided the fixtures and fittings are up-to-date, of good quality and enhance the appeal of the property, their tenants should be kept happy.
Modern bathroom and kitchen facilities
Gone are the days of patiently queueing outside the communal toilet while waiting for your turn to use the shower. Tenants now want en-suite facilities, or their own toilet at the very least.
And never underestimate the importance of a clean, stylish kitchen with working electrical appliances and white goods. Don’t forget to make sure there’s enough space for everyone to store their own provisions, including food and pots and pans.
Is the property energy efficient?
Although the government has scrapped plans to enforce minimum energy performance certificate ratings in England, younger generations of renters have indicated that living in an energy-efficient property is one of the things they look for when choosing a new home. So investing in energy saving measures now, could pay dividends in the long run.
Energy saving such as installing double-glazed windows, a new boiler and loft insulation will not only mean a better EPC rating and therefore lower energy bills, it’ll also make the property more attractive to prospective new tenants, both now and in the future.
We know that every buy to let case is different and while some lenders may not be able to help, we see the potential in each application we receive.
As one of just a few lenders in the market who’ll consider applications for HMOs of six bedrooms or fewer from first-time landlords, and applications for 20 bedrooms or fewer from more experienced landlords, we know what it takes to help landlords realise their HMO goals.
With more landlords looking to take advantage of the opportunities HMO properties can offer, it’s never been more important that they’re in tune with their tenants’ needs. By getting these things right, they’ll be well on the way to creating a place that tenants are happy to call home.
Adrian Moloney is group intermediary director, Kent Reliance for Intermediary, part of OSB Group
